The legality of employment non-competition agreements has been a hot topic in 2023. Highlights include the Federal Trade Commission’s proposed rule to make most employment non-competition agreements an unfair deceptive trade practice under federal law, another federal bill seeking to prohibit them, and Minnesota joining a number of states where such agreements are banned. The National Labor Relations Board’s General Counsel, Jennifer A. Abruzzo, added fuel to the ongoing debates regarding the future of employment non-competition agreements. On May 30, 2023, in a memo to all regional directors, officers-in-charge, and resident officers, Abruzzo expressed her views that, except in limited circumstances, non-competition agreements between employers and employees interfere with employees’ exercise of rights under Section 7 of the National Labor Relations Act (“NLRA” or “Act”).
Section 7 of the NLRA guarantees employees the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Section 8(a)(1) of the Act makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the Act.
In her memo, Abruzzo concludes that most non-competition agreements are overbroad and unlawful because...
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